Minimum wage issue caused maximum debate

By Loren Steffy |
July 28, 2006

SANTA FE, N.M. — Ivan Cornejo may be one of the highest paid bank tellers of his kind in the country.

Without any previous experience, Cornejo began working four months ago as a teller for Wells Fargo here. He makes $9.50 an hour.

Cornejo, 19, isn't alone. Across this resort community, dishwashers, janitors, painters, landscape workers, all make $9.50 an hour as a starting wage.

Two years ago, Santa Fe became one of the first cities in America to enact a living wage, an ordinance that set a higher minimum wage based on Santa Fe's higher cost of living.

In a city where a loaf of bread costs $2.29, a gallon of milk runs $4.50 or more and a gallon of gasoline sells for about $3.15, the federal minimum wage was basically a guarantee of poverty for full-time workers.

"It's not just something we want, it's something we need to live here," Cornejo says. "Everything was going up except the wages."

Most business owners agree, although they don't see a mandatory $9.50 an hour as the solution. A few minutes away from the bank where Cornejo works, Beth Draiscol runs the Zia Diner, a local favorite she opened in 1986.

Draiscol says she favored a higher minimum wage, but she staunchly opposed the city ordinance. The rate was too high, and as a business owner she can't plan her labor costs because of the prospect of future increases. The city, for example, will consider another increase in 2008 that could raise the minimum wage to $10.50.

"That's an amazing amount of money to pay somebody who's never worked in the business before," Draiscol says. "I feel like I'm being punished for being in business in this town."

Issue divides the city

In some ways, the living-wage battle divided the city, and many supporters still tend to characterize business owners who opposed it as simply greedy. But the fight didn't pit workers against big business so much as small-business owners against their employees, which Draiscol says she resents.

The Zia has about 65 employees and generates annual sales of about $2 million. Draiscol's labor costs run about $750,000. To account for the higher wage, she's raised her prices by about 10 percent.

Prices on menus rising

Across town, Al Lucero, who owns Maria's New Mexican Kitchen, says he raised prices by about 5 percent. Neither he nor Draiscol have noticed a drop in business because of the higher prices.

That, proponents say, proves the point. The community, which overwhelming supported the living wage, is willing to pay more to support higher wages. Morty Simon, a local lawyer who with his wife, Carol Oppenheimer, were major organizers of the living-wage effort, says higher wages have a multiplier effect. More discretionary income means more money to spend in the local economy.

"I'm proud of this city," says Larry Keller, owner of Design Warehouse and one of the few business owners who supported the ordinance. "For me, it's a common-sense issue. If you want people to do good work, you have to pay them a salary that they can live on."

With only about eight employees, Keller's store wasn't covered by the new law, which applies only to businesses with 25 employees or more. Keller, however, says he was already complying with the terms of the ordinance before it was adopted.

After two years of living with the living wage, it seems the wounds of the battle may be healing somewhat, and business owners such as Draiscol and Lucero say, in hindsight, they would do things differently.

Asked if he had advice for business owners in other cities that are considering a living-wage ordinance, Lucero, who was one of the provision's staunchest opponents, said finding a compromise early is important.

Public sentiment, he warned, will work against them, as it did in Santa Fe.

Support for a living wage is emotional and political "with no thought given to what it's going to do to business and the economy long term," he said.

Knee-jerk opposition

"The business community had no intention of any sort of compromise," she says. "They were pretty much contemptuous of this idea."

Draiscol acknowledges that business owners may have been knee-jerk in their opposition.

"As business people we tend to be so antiregulation that perhaps we just dug our heels in instead of trying to reach a compromise," she says. "Businesses really do need to realize that minimum wages have to go up."

If the federal government doesn't take action, then states and cities will, she says.

Nowhere is that lesson more obvious than here.

Correction

In Wednesday's column, I misspelled the name of Santa Fe Mayor David Coss.